Germany's exports to the US in May 2025 fell sharply by 7.7%, causing the country's total exports of goods to fall 1.4% compared to the previous month, according to destatis statistics agency. Germany's export value to the US fell sharply to 12.1 billion euros, the lowest level since March 2022.
Despite the decline, the US is still Germany's largest export market. Currently, the US tax rate on goods from the European Union is: 25% for cars, 50% for metals, 10% for other items. The tax policy has caused EU exports to the US to decrease by about 10% in April 2025.
On July 7, US President Donald Trump issued an executive order to extend counterpart tariffs after the temporary suspension expired on July 9.
Experts say the risk of additional tariffs remains a constant threat to German and European exporters.
The risk of additional suspended taxes like the Damocles bar on the heads of German and European exporters - Carsten Brzeski, head of macroeconomic research at ING, wrote in the document to customers. Damocles rhinoplasty is often used to point to an imminent danger or judgment.
Trade data for May 2025 showed that export growth at the beginning of this year came from early US imports, however, this effect has ended.
Exports are the key to Germany's economic strength, with the main products being cars and pharmaceuticals. Cheap Russian gas plays an important role in production in Germany. However, the conflict in Ukraine has pushed up energy costs, exacerbating current concerns about the German economy, which has many stronger competitors and is in the process of transitioning to green energy.
German Central Bank President Joachim Nagel shared on July 7: "The German economy is facing many difficulties in a short time".
The German economy is likely to stagnate this year. Increased taxes and increased uncertainty could reduce Germany's growth by about 0.75%. If trade conflicts escalate, growth could fall by 1.5% by 2027.
The situation is still very unpredictable, both intensification and cooling of tensions can happen at any time, said Mr. Nagel.
The German government could somewhat reduce the impact of taxation by implementing a plan to sharply increase spending on infrastructure and defense, loosening the fiscal tightening policy that has been maintained for many years.
Despite recent improvements, business and consumer confidence is still low. The appreciation of the euro against the USD could also reduce demand for German goods.
Due to a sharp decline in imports compared to exports, a sign of weak demand, Germany's trade surplus increased from 15.7 billion euros in April to 18.4 billion euros in May.
